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Vietnam businesses optimistic despite global turmoil

Publication Date : 16-10-2012


Businesses are optimistic that they wouldn't have to scale back their operations this year despite tough market conditions, according to a recent survey by the Vietnam Chamber of Commerce and Industry (VCCI).

The survey on business during the third quarter, conducted through the chamber's website, found that nearly 97 per cent of local enterprises would maintain their current business scales by the end of this year.

About 18 per cent of businesses surveyed said they would possibly expand businesses while over 11 per cent intended to narrow the scale of their operations. About 0.7 per cent might suspend business activities and 0.2 per cent said they may close down or dissolve.

Surveyed companies said their production and business situation was much tougher in the third quarter than that in the second, but they anticipated conditions would ease during the remainder of the year.

VCCI General Secretary Pham Thi Thu Hang said production and business indices, especially turnover, profit and inventory levels, tended to worsen at many firms, and these factors would continue to worry enterprises.

Sharp falls in profit were the main cause for the overall dim situation during the third quarter, she said, adding that economic difficulties had resulted in falling production capacity as well as employee cut-backs at businesses.

Enterprises said they assessed that the country's macro-economy was getting worse, although transparency, consistency and equity were improved for administrative procedures.

While nearly 83 per cent of those polled saying they were borrowing capital with interest rates of 15 per cent and below, only 0.6 per cent said the 15 per cent rate was reasonable and about 56 per cent said they wouldn't be able to meet this level in the long run.

Around 20 per cent said they couldn't access bank loans due to high interest rates, strict lending conditions or complicated borrowing procedures; and many firms were seeking other capital sources.

Thirty-one per cent said interest rates should be between 10 and 11 per cent, and nearly 32 per cent said the rates should be 8 to 9 per cent.

Over 65 per cent said loosening lending policies positively affected their activities, while about 25 per cent said these policies hardly had any impacts on them, since many firms now didn't need to borrow money due to falling purchasing power on the market.

About 63 per cent said high inventories were serious concerns for them, with 35 per cent having seen inventories increase in the third quarter over levels during the second quarter.

To deal with this problem, 53 per cent were seeking new export markets, 24 per cent were cutting selling prices and 4 per cent were attempting to sell more goods in rural areas.

Meanwhile, 29 per cent said the government should organise more trade promotion programmes, and 26 per cent said input costs for enterprises such as electricity prices should be cut to help firms reduce inventories.


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